Competency 15 Flashcards
What is the traditional economy?
economy based on custom, and usually exists in less developed countries. People do things the way their ancestors did
Laissez-fare Capitalism is based on the premise of _____ ________ ________ in the eocnomy?
No Government Intervention (Invisible hand)
What is a Command economy?
exact opposite of market economy. Government ownership of the production and the use of planning to take the place of the market
What is a mixed economy?
uses a combination of markets and planning economy. (world)
What is the difference between traditional, command, market, and mixed economies?
Traditional is in less developed countries
Market economy is based on supply & demand
Laissez-fare is no government intervention
Comand economy is when government plans the production
Mixed economy is a mixture of all the economies (real world)
What is a market economy?
Answers the 3 questions in terms of supply and demand
What is a centrally planned economy?
opposite of the market economy
used to be called communism
means of production are pubically owned
Intervention of answering the 3 questions
What is market socialism?
between the 2 extremes of market economy and centrally planned economy. Mix of the two.
What is the GDP?
Monetary measure of the economies input during a specified time period. All nations use this to meausre and compare their national production with other countries. This is done in 2 ways, Looking for the what is coming in and what is going out. A good GDP is basically a good balance of spending and income.
How do economic systems influence social structure?
Traditional economy is not receptive to change. Therefore, social structure also does not change.
Planned economy is supposed to be a classless society. But, upper levels of government and miliitary are a notch above the population. No incentives for the people to take risks of businesses because only government can own businesses.
In a mixed economy and market economy, individuals have the opportunity to gain financial rewards for business ventures.
How do economies grow?
lesser developed countries are producers of primary products like minerals or oil. More developed countries are dependent on these lesser developed countries for their resources. In order that these lesser devleoped countries have economies that don’t plunge because of less demand, nations develop buffer stocks. In the middle east, the oil producing countries formed a cartel (league). The countries in a cartel work together to form a monopoly. For exaple, OPEC is a cartel in the Middle East that controls oil prices. When prices of oil go down, the cartel will restrict the supply of oil, which causes greater demand and the prices go up.
What are 3 economic growth strategies?
through commodity (having a resource to offer other countries)
import substitution (protect the domestic industry with trade barriers so people buy the product made in their country instead of what’s made in the foreign country)
Export developments (country exports goods that its resources are suited for and imports goods that it is not suited for)
Why can’t nations practice economic isolationism in today’s global economy?
No nation has all the resources needed to be totally self-sufficient, even US
What in a global economy links nations together?
international trade, commerce, and finance that make it so that all economies are interdependent.
